Sales Fall at 'Broken' McDonald's

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Not all is happy in McDonaldland.

McDonald's reported its first-quarter earnings Friday morning, and while profit rose slightly, comparable-store sales in the U.S. fell 1.2%. Things were even worse abroad, with comparable sales in Asia, the Middle East and Africa falling 3.3%.

In a statement accompanying the filing, McDonald's (MCD) CEO Don Thompson cited "global economic headwinds" and a "challenging eating-out environment."

The poor sales don't come as a complete shock. While the company reported improved profits in the fourth quarter of 2012, it also saw sales decline in key foreign markets and dealt with a drop in operating profit margins.

Though popular, the McRib barbecue sandwich can't solve all of the chain's problems. So in recent months, McDonald's has introduced Chicken McWraps in a bid to stimulate sagging sales. But franchisees recently complained that the sandwiches took too long to prepare.

And the company is also confronting the fact that customer-service issues are rampant at its franchises: According to one report, McDonald's officials told franchisees that "service is broken." QSR Magazine, an industry trade publication, found that the average wait time at the McDonald's drive-through window was a full minute slower than at rival Wendy's (WEN).

McDonald's stock dropped by more than 2 percentage points to $99.76 a share in pre-market trading.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

27 PHOTOS
Go Inside The Secret Test Kitchen Where McDonald's Invents New Menu Items
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Sales Fall at 'Broken' McDonald's

Tucked away at the McDonald's C.O.B. — or Campus Office Building — is the test kitchen, where the fast food chain comes up with all sorts of products.



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The kitchens are up on the top floor on Big Mac Blvd. Yes, McDonald's names all the "streets" in its global headquarters office building.



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Here's what Big Mac Blvd. looks like. Kitchens on the left, cubicles on the right.



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Here we are — the test kitchen is called the Culinary Center.



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It's a bit strange, actually — a McDonald's kitchen encased in glass that's more fitting for a conference room.



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The kitchen has some appropriate reading.


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We met up with Chef Jessica Foust, a nutrition and culinary manager at the test kitchen.



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Judging by the setup, the kitchen was prepped to handle the McWraps and Fish McBites. The box o' fish is the McDonald's latest limited-time offering, hitting locations just in time for Lent.



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It has all the gadgets that a regular McDonald's kitchen would have.



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Like these handheld pumps.



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And the usual cups and shakers.



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There's even a little guide on how to get buns toasted perfectly.



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So we ran through the whole process of making a McWrap — a product that McDonald's is counting on going forward.



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The whole assembly line was set up — simple enough.



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The finished product (well, after we'd taken a bite) — just like you'd see in restaurants.



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We also got to try those Fish McBites, which weren't in stores yet.



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The breading's different from a Filet-O-Fish and it's a totally different experience.



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A lot of people shy away from fast food fish, but it wasn't too bad. We wouldn't go out of our way to order it, though McDonald's Filet-O-Fish lovers might.



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What's Foust's favorite item that never made it into restaurants? A blueberry yogurt ice cream shake, she told us.



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That's not the only kitchen at the McDonald's HQ. There are plenty more running down the side of Big Mac Blvd.



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On the way to another one, we ran into Chef Dan Coudreaut, the executive chef at McDonald's.



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Other chefs were at work too. This one was getting some bacon ready for some unknown project.



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It was a bit of a mess in there, like a scientist's lab, with chefs busy at work with their food.



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There's also the Sensory Evaluation Center, which McDonald's uses to test the new stuff they're experimenting with in order to get the feedback to improve the products.



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It's a key part of product development. In the Difference Test, you evaluate everything from appearance and color to viscosity and flavor.



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The items come through a magic door. We tasted a set of mango pineapple smoothies and each of them were slightly different.



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